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At the Equilibirum Price, Desired Quantity Demanded Equals Desired Quantity Supplied

The word equilibrium suggests balance and stability. When a market is in equilibrium, there are no market shortages or surpluses. Consumers are able to purchase all of the particular good or service they wish to at the equilibrium price. You don't need to "know someone" or "have a friend in the business" to be able to buy the product at the equilibrium price. Firms are able to sell all the units they wish to sell at the equilibrium price. They do not find their inventories of this product building up, and retailers don't find unsold units of this product sitting on the shelf for months, collecting dust.

To the right, we show a market in equilibrium. Where the Demand Curve, labeled D and the Supply Curve, labeled S intersect, at point E, the market is in equilibrium. At this point, both the desired quantity demanded and the desired quantity supplied equal QE, and the market price that gives us this equilibrium is PE. We can also say that this market clears, meaning that there will be no unsold units and no unsatisfied demand at this price. Equilibrium does not suggest that everyone is completely satisfied. Consumers would always like prices to be lower and sellers would always like to sell more at higher prices, it simply means that no one wishes to sell or buy more, at the equilibrium price.

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